Purchasing a property without personal guarantee

[Alan Rohrer]

I am new to the forum and am in the learning phase. I hope to begin my first search for a rental property in the next few months after I get more knowledgeable on the topic.

Is it possible, and if so, how, to purchase a home without putting a personal guarantee. For instance, could I go to a bank with a deal I found (let's say I found a property selling for 80% of market value), put low money down, and put the house I am purchasing as collateral?

What has been your experience with this? I would do this through an LLC mainly to shelter myself from personal risk.

Thanks!

[Will Barnard]

As far as banks are concerned, there is no such thing as non recourse loans with low money down. Non recourse loans will typically require at least 35% down payment. If you want a non personal guarantee and low money down, you will need to look at seller carried financing or private money loans. That said, with no personal guarantee and no experience, it will be more difficult to find private money at rates low enough to make sense for a long term rental and no other collateral other than the high loan to value subject property which places the private money at a much higher risk.